The UK Financial Conduct Authority (FCA) has announced it is applying increased scrutiny to firms that must register under anti-money laundering (AML) rules, including unregulated lenders, safe custody providers, money brokers, and financial leasing companies, collectively known as Annex 1 firms.

The regulator said it is concerned about a number of risks identified among these firms, particularly the potential for them to facilitate financial crime. It noted that some firms rely too heavily on the financial crime controls of their parent companies, and that each individual firm must assess whether those controls are appropriate for its own risks, governance, and operations. Off-the-shelf procedures designed for a different company are not sufficient, the FCA said.

The FCA also highlighted risks to consumers and markets from unregulated lending conducted through complex structures, including special purpose vehicles. It recently warned regulated firms about doing business with Annex 1 firms, urging them to conduct due diligence and seek direct confirmation of registration status.

To address these risks, the FCA is closely scrutinising registration applications and expects them to take longer. It has also sent an information request to around 900 Annex 1 firms to better understand their activities, business models, and risks, following similar work with 300 firms in late 2025. The regulator said it will use this intelligence to identify and disrupt financial crime risks in the sector.